cps order denying summary judgment

8/4/2019 CPS Order Denying Summary Judgment

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10-2697.111-RSK August 16, 2011

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

ROSLYN GRIFFITH and JERRET CAIN, ))

Plaintiffs, ))

v. ) No. 10 C 2697)

CONSUMER PORTFOLIO SERV., INC., ))

Defendant. )

MEMORANDUM OPINION

Before the court is defendant Consumer Portfolio Services,

Inc.s (CPS) motion for summary judgment. For the reasons

explained below, we deny CPSs motion.

BACKGROUND

The named plaintiffs in this case, Roslyn Griffith and Jerret

Cain, allege that they received unauthorized telephone calls and

text messages on their cellular telephones from CPS, a sub-prime

auto-finance lender. The sole question raised by CPSs motion for

summary judgment is whether it employs an automatic telephone

dialing system, as that term is defined by the Telephone Consumer

Protection Act (TCPA), 47 U.S.C. 227(a). The manner by which

CPS places its debt-collection calls is largely undisputed. CPS

stores customer information on its computer network chronologically

(by loan date) in a file known as the Customer Information File.

(Def.s Stmt. of Undisputed Material Facts in Support of its Mot.

Case: 1:10-cv-02697 Document #: 65 Filed: 08/16/11 Page 1 of 11 PageID #:659


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for Summ. J. (hereinafter, Def.s Stmt.) 5-6.) The Customer

Information File is located in a portion of CPSs computer network

known as the Collections System. (Id. at 6.) In each of its

offices CPS maintains a dialer, manufactured by Castel, Inc.,

which automatically places calls to CPS customers so that [CPS]

does not have to manually dial every customer who falls behind on

payments. (Id. at 7.) Each Castel dialer connects to: (1)

CPSs computer network; and (2) a private branch exchange, which

connects the dialer to the customers it calls. (Id.) Using this

equipment CPS conducts dialing campaigns, calling multiple

customers at a given time. (Id. at 8.)

The night before a dialing campaign begins, a computer program

reviews account information for every CPS customer listed in the

Customer Information File and identifies customers eligible for the

dialing campaign using criteria selected by CPS. (Id. at 9; see

also Gallagher Decl. 8 (stating that as a first cut CPS might,

for example, use the program to identify all customers who are less

than 60 days in arrears).) This same program then copies the

account and telephone numbers of each eligible customer into a new

temporary computer file called the Dialer File. (Def.s Stmt.

10.) On the day of the campaign, a supervisor in CPSs collections

department inputs additional criteria for the dialing campaign into

CPSs Collections System, effectively telling the CPS Collection

System which numbers the dialer should call. (Id. at 11; see



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also Clewell Decl. 7 (The supervisor might decide, for example,

that Illinois customers who owe $500 or more and are 21 to 30 days

behind should be called during the campaign.).) The program then

reviews the Dialer File for accounts that satisfy the criteria and

copies those accounts and associated telephone numbers into a new

file called the Logical View File. (Def.s Stmt. 13.) At the

same time, the supervisor assigns certain CPS employees

(collectors) to the campaign, who then use the program to sign

on to the campaign so that they can answer the calls made by the

Castel dialer that actually connect to consumers. (Id. at 14.)

Once the dialing campaign begins, the Castel dialer reads the

telephone numbers at the predictive dialing rate set by the

supervisor. (Id. at 15.) (Predictive dialing software on the

Collections System regulates the dialers call rate to improve

efficiency. (Gallagher Decl. 10; see also Def.s Stmt. 12.))

The dialer determines whether a call is answered by a customer, and

if so, routes the call back to CPSs computer system, which

forwards the call to an available collector. (Def.s Stmt. 16.)

The customers account information appears on the collectors

computer screen as he or she receives the call. (Id.) While

speaking with the customer, the collector enters data into the

Customer Information File in the Collections System. (Id. at

17.) After the dialing campaign is completed, the Collections



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System prepares reports on the results of the dialing campaign.

(Id.)

DISCUSSION

A. Legal Standard

The court shall grant summary judgment if the movant shows

that there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law. Fed. R. Civ.

P. 56(a). In considering such a motion, the court construes the

evidence and all inferences that reasonably can be drawn therefrom

in the light most favorable to the nonmoving party. See Pitasi v.

Gartner Group, Inc., 184 F.3d 709, 714 (7th Cir. 1999). The court

need consider only the cited materials, but it may consider other

materials in the record. Fed. R. Civ. P. 56(c)(3). Summary

judgment should be denied if the dispute is genuine: if the

evidence is such that a reasonable jury could return a verdict for

the nonmoving party. Talanda v. KFC Natl Mgmt. Co., 140 F.3d

1090, 1095 (7th Cir. 1998) (quoting Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 248 (1986)). The court will enter summary

judgment against a party who does not come forward with evidence

that would reasonably permit the finder of fact to find in [its]

favor on a material question. McGrath v. Gillis, 44 F.3d 567, 569

(7th Cir. 1995).



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B. Automatic Telephone Dialing System

The TCPA prohibits calls to certain telephone numbers,

including cellular telephone numbers, using an automatic telephone

dialing system, except in an emergency or with the recipients

prior express consent. 47 U.S.C. 227 (b)(1). As defined in

the statute, an automatic telephone dialing system means

equipment that has the capacity (A) to store or produce

telephone numbers to be called, using a random or sequential number

generator; and (B) to dial such numbers. 47 U.S.C. 227 (a)(1).

The phrase random or sequential number generator is not defined.

As we understand these terms, random number generation means

random sequences of 10 digits, and sequential number generation

means (for example) (111) 111-1111, (111) 111-1112, and so on.

CPSs expert states that early dialers operated in this fashion,

calling every conceivable telephone number. (Cutler Decl. 15.)

More recently, companies like Castel have developed dialers that

call lists of known telephone numbers in this case, the telephone

numbers of CPSs customers. (Id. at 16.)

In 2002, the FCC solicited comments concerning the TCPAs

definition of an automatic telephone dialing system. See In the

Matter of Rules and Regulations Implementing the Telephone Consumer

Protection Act of 1991, 17 FCC Rcd 17459, 17473-476 (September 18,

2002). The FCC acknowledged that autodialing technology had

advanced. See id. at 17474 (More sophisticated dialing systems,



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such as predictive dialers and other electronic hardware and

software containing databases of telephone numbers, are now widely

used by telemarketers to increase productivity and lower costs.).

In light of that fact, it sought comments concerning whether

Congress intended the definition of automatic telephone dialing

system to be broad enough to include any equipment that dials

numbers automatically, either by producing 10-digit telephone

numbers arbitrarily or generating them from a database of existing

telephone numbers. Id. Specifically, we ask whether a

predictive dialer that dials telephone numbers using a computer

database of numbers falls under the TCPAs restrictions on the use

of autodialers. Id. at 17475. As CPS points out, several

companies argued that predictive dialers fell outside the TCPAs

scope because a list or database of actual customer telephone

numbers is, by definition, not randomly or sequentially generated.

See, e.g., Comments of the American Teleservices Assn, attached as

Ex. C to Stone Decl., at 113 (Predictive dialers do not generate

random or sequential telephone numbers. Instead, they rely on

telephone numbers from lists provided by the equipment operator.

These lists are anything but random or sequential.). The

thrust of these comments was that Congress, in enacting the TCPA,

intended to regulate an especially vexatious type of autodialing,

not autodialing generally. (See, e.g., Comments of Mastercard

Intl Inc., attached as Ex. B to Stone Decl., at 6 ([P]redictive



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dialers are generally used to dial numbers the telemarketer intends

to call, not those randomly generated which may include hospital

rooms, etc.) (emphasis in original).)

The FCC effectively rejected these comments, concluding that

a predictive dialer falls within the meaning and statutory

definition of automatic telephone dialing equipment and the

intent of Congress. In the Matter of Rules and Regulations

Implementing the Telephone Consumer Protection Act of 1991, 18 FCC

Rcd 14014, 14093 (July 3, 2003). The technology had changed, but

the basic function of such equipment the capacity to dial

numbers without human intervention had not. Id. at 14092

(emphasis in original). The FCC went on to conclude that,

[T]o exclude from [the restrictions on automated andprerecorded calls] equipment that use [sic] predictivedialing software from the definition of automatedtelephone dialing equipment simply because it relies ona given set of numbers would lead to an unintendedresult. Calls to emergency numbers, health carefacilities, and wireless numbers would be permissiblewhen the dialing equipment is paired with predictivedialing software and a database of numbers, butprohibited when the equipment operates independently ofsuch lists and software packages. We believe the purposeof the requirement that equipment have the capacity tostore or produce telephone numbers to be called is toensure that the prohibition on autodialed calls not becircumvented.

Id. at 14092-93. In 2008, in response to a request for

clarification, the FCC affirm[ed] that a predictive dialer

constitutes an automatic telephone dialing system and is subject to

the TCPAs restrictions on the use of autodialers. In the Matter



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of Rules and Regulations Implementing the Telephone Consumer

Protection Act of 1991, 23 FCC Rcd 559, 566 (Jan. 4, 2008). The

petitioner requesting clarification argued that a predictive

dialer meets the definition of autodialer only when it randomly or

sequentially generates telephone numbers, not when it dials numbers

from customer telephone lists. Id. The FCC rejected this

interpretation, citing the policy considerations that guided its

2003 ruling. Id. at 566-67.

CPS acknowledges that the FCCs final orders are binding on

this court under the Hobbs Act. See 28 U.S.C. 2342(1); 47 U.S.C.

402(a); CE Design Ltd. v. Prism Bus. Media, Inc., 606 F.3d 443,

446-50 (7th Cir. 2010); (Def.s Mem. at 10 n.4). But it argues

that the FCCs 2003 and 2008 orders are really quite narrow.

According to CPS, to fall within the FCCs interpretation of an

automatic telephone dialing system the equipment in question must

have the technical ability to perform the now obsolete functions

performed by dialers when Congress originally passed the TCPA.

That is, it must be able to store or produce numbers using a

random or sequential number generator and dial numbers randomly

or sequentially. (Def.s Mem. at 10.) According to CPSs

witnesses, the Castel dialer cannot perform these functions.

(Cutler Decl. 19-20; Gallagher Decl. 16.) CPSs

interpretation of the FCCs orders, which it supports by quoting

portions of those orders out of context, is a transparent attempt

to win through litigation a battle that other companies lost before



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the FCC. After straining to avoid the clear implications of the1

FCCs orders, CPS finally resorts to the argument that the FCC

cannot have meant what it said because it is inconsistent with the

TCPA. (Def.s Reply at 4.) This is not the appropriate forum to

challenge the validity of the FCCs orders. See CE Design Ltd.,

606 F.3d at 450. Our role is to apply the FCCs orders to the

facts. Id. at 446 n.3. The FCC concluded that predictive dialers

are governed by the TCPA because, like earlier autodialers, they

have the capacity to dial numbers without human intervention.2

In doing so, it interpreted automatic telephone dialing system to

include equipment that utilizes lists or databases of known,

nonrandom telephone numbers. That is precisely how CPSs equipment

operates: the dialer automatically dials numbers stored in the

Logical View File and routes answered calls to available

collectors. Even assuming that CPSs equipment can only function

in this way, and cannot generate and dial random or sequential

Even if we accepted CPSs interpretation, we would not award it summary1/

judgment based upon the conclusory testimony of its witnesses. See, e.g., Bournev. Marty Gilman, Inc., 452 F.3d 632, 638 (7th Cir. 2006) ([A]n expert'sconclusory assertions are of no evidentiary value.). The dialer dials thenumbers it is told to dial. (Pl.s Stmt. 11.) Gallagher and Cutler do notexplain why they believe that the Castel dialer cannot be told i.e.,programed to dial numbers randomly or sequentially. They simply concludewithout any explanation or analysis that it cannot perform these functions.

Gallaghers insistence that the Castel dialer cannot dial numbers2/

automatically is disingenuous. (Gallagher Decl. 16.) CPSs collectors do notdial the numbers, the dialer does. (Def.s Stmt. 7 (CPS maintains a CastelDialer in each of its offices so that it does not have to manually dial everycustomer who falls behind on payments.).) This is automated dialing under anyreasonable interpretation of that phrase. The fact that it is more efficientthan manual dialing is one of the reasons that it is regulated. See In theMatter of Rules and Regulations Implementing the Telephone Consumer ProtectionAct of 1991, 18 FCC Rcd at 14092 (calls from autodialers to restricted categoriesof telephone numbers are particularly troublesome because autodialers can dialthousands of numbers in a short period of time.).



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numbers (cf. supra n. 1), it is still an automatic telephone

dialing system. Likewise, we find no support in the statute or3

the FCCs rulings for CPSs argument that the dialer itself must

store telephone numbers and/or predictive dialing software.

(Def.s Mem. at 11.) The statute regulates equipment, not

dialers, so it is irrelevant for our purposes that the Castel

dialer works in tandem with CPSs Collections System. (Cf. id.)

Indeed, the FCC plainly intended to prevent companies from

circumventing the statute in this fashion. In the Matter of Rules

and Regulations Implementing the Telephone Consumer Protection Act

of 1991, 18 FCC Rcd at 14092-93. Plaintiffs ask us both to deny

CPSs motion and to hold for plaintiffs as a matter of law on the

same issue. (Pls. Mem. at 2.) We will grant the request. For

the reasons we have just explained, we conclude as a matter of law

that CPS employs an automatic telephone dialing system to call

its customers.

Finally, we reject CPSs argument that the TCPA only applies

to telemarketing, not debt collection. (Def.s Mem. at 12; Def.s

Reply at 8-10.) Certain TCPA provisions apply only to telephone

solicitations, and consequently those provisions do not apply to

debt-collection calls. In the Matter of Rules and Regulations

Implementing the Telephone Consumer Protection Act of 1991, 23 FCC

Insofar as Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 950-513/

(9th Cir. 2009) can be read to support a different result, we reject it. TheSatterfield court did not analyze or even cite the relevant provisions of theFCCs 2003 and 2008 orders.



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Rcd at 565. But 227(b)(1)(A)(iii) the provision that

plaintiffs allege CPS violated prohibits the use of autodialers

to make any call to a wireless number in the absence of an

emergency or the prior express consent of the called party. . . .

[T]his prohibition applies regardless of the content of the call,

and is not limited only to calls that constitute telephone

solicitations. Id.

CONCLUSION

CPSs motion for summary judgment (24) is denied. CPSs

motion to strike the declaration of Randall Snyder (61) is denied

as moot. We hold, as a matter of law, that CPS employs an

automatic telephone dialing system to call its customers.

DATE: August 16, 2011

ENTER: ___________________________________________

John F. Grady, United States District Judge


cps order denying summary judgment

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